The Next Television Platform, Part 1

One could look at this, as Pakman and many others do, and rightly conclude that the growing green wedge illustrating the explosion of time spent on mobile devices represents the future.

I look at this chart and see another opportunity. The largely unchanged and very large block in dark blue at the bottom — the four plus hours per day we spend watching live television — is now up for grabs. We’re at the beginning of a massive shift away from live linear television (cable & satellite) to on-demand over-the-top TV (Netflix, Amazon Instant, Hulu, HBO Go).

This shift is already well underway for some. Which age cohort is leading the switch away from linear TV to paid over-the-top video services? Millennials. These two charts tell the tale:

falling off a cliff

People of all ages are watching these OTT services on devices that might surprise you (hint, it’s not the phone). Connected TV streaming players (like the Apple TV, Amazon’s FireTV, Roku, or Chromecast) and laptops and desktops dominate.

And among all the age cohorts — surprise again! — millennials are the most likely to watch a service like Netflix through a connected TV device.

The data and trends are even more remarkable when you consider the penetration of connected TV streaming players is still relatively low (27% overall in the US as of January 2015, compared to 85% for smartphones among millennials) and in the early days (just a hobby for Apple, though rumors abound that that is about to change).

One big new business has already been built as a result of these changes (Netflix). And as more good services (HBO Go, Showtime Anywhere, ESPN, and others) are available through streaming players like the Roku or AppleTV, more people will buy those devices and use them. As tens of millions of Netflix fans have already learned, once you get used to the delights of the on-demand over-the-top TV, you don’t really want to go back to linear television. The opportunity on mobile is huge and will continue to grow, but building services and platforms for connected TV devices is skating to the puck.

So while the next video platform will need to work on all the devices we use today (phones, tablets, computers and TVs) I’d bet it will be most at home on the television. But winning on the TV will likely require a different economic approach (“just sell ads” won’t be sufficient). We’ll cover that in the next posttomorrow.